LG New Energy's Third Quarter Profit Expected to Grow by 34%

According to foreign media reports, on October 13, South Korean power battery manufacturer LG Energy Solution stated that its operating profit for the third quarter is expected to increase by 34% due to a surge in electric vehicle purchases by American consumers ahead of the expiration of federal government subsidies on September 30.

LG Energy Solution supplies electric vehicle batteries to General Motors and Tesla in the United States. According to its estimates, the company's operating profit for the period from July to September will be 601 billion Korean won (approximately 420 million US dollars), a significant increase from 448 billion Korean won during the same period last year.

Image source: LG Energy Solution

This preliminary data exceeds the analysts' expectations compiled by the London Stock Exchange Group (LSEG) of 528 billion won. Industry analysts point out that the surge in electric vehicle sales in the U.S. before the expiration of the federal tax credit policy of up to $7,500 per electric vehicle in September may be a significant boost to LG Energy Solution's profit growth.

Boosted by this news, LG Energy Solution's stock price rose 1.5% against the backdrop of a 1.4% drop in the broader market.

LG Energy Solution stated in a regulatory filing that excluding the U.S. battery manufacturing subsidies it received under the Inflation Reduction Act, its operating profit for the third quarter was 236 billion Korean won. It is reported that the company will release detailed financial results on October 30.

LG Energy Solution issued a warning in July stating that due to the cancellation of the U.S. tax credit policy and the import tariffs implemented by the Trump administration, electric vehicle demand in the U.S. may further slow down by early next year.

In addition, to offset the impact of weak demand for electric vehicles and improve profit performance in the second half of this year, LG Energy Solution has begun to expand the production capacity of energy storage system batteries.

The company has signed a $4.3 billion agreement with Tesla to supply battery energy storage systems for Tesla. Currently, Tesla is seeking to reduce its reliance on Chinese imports due to tariff issues, and this collaboration is a reflection of that strategy.

In September this year, the battery factory jointly established by LG Energy Solution and Hyundai Motor in the United States faced setbacks. In early September, U.S. authorities conducted an immigration raid at the factory located in Georgia, resulting in the arrest of hundreds of South Korean employees, and the construction of the factory was subsequently halted. Hyundai Motor's CEO, Jose Munoz, stated last month that following this raid, the start-up time of the factory will be delayed by at least 2 to 3 months.

At the beginning of this month, the Trump administration agreed to allow South Korean personnel to operate equipment in U.S. factories with their existing temporary visas. The next day, LG Energy Solutions announced that it would gradually resume business travel to the United States for its employees and subcontractors.